Do The USPTO 101 Guidelines Violate International Trade Agreements?

One advantage of being a blogger in the relatively small world of patents is that I have gotten to know practitioners in other countries who also have a keen interest in patent law. One such person is Australian Registered Patent Attorney Mark Summerfield, who blogs at Patentology. I enjoyed his article on the new USPTO 101 Guidelines, and that led to a discussion where he raised the question whether the Guidelines violate international trade agreements. He agreed that I could share his comments here, and I do so to spark further consideration, discussion, and public comments challenging the Guidelines.

International Concerns

One thing some of us are wondering down-under is whether the USPTO interpretation of the Myriad decision, if correct, places the United States in breach of its obligations under various international agreements, such as Chapter 17 of the Australia-US Free Trade Agreement (AUSFTA). The US is generally very quick to criticise trading partners for any perceived weaking of IP protections!

Article 17.9(1) of the AUSFTA clearly states that “[e]ach Party shall make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step, and is capable of industrial application. The Parties confirm that patents shall be available for any new uses or methods of using a known product.”

Article 17.9(2) provides that each Party may only exclude from patentability ‘(a) inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect order public or morality, including to protect human, animal, or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by law; and (b) diagnostic, therapeutic, and surgical methods for the treatment of humans and animals.”

Excluding genomic DNA is no doubt arguably covered under (a), while the outcome in Mayo clearly falls within (b). But if new and useful combinations, uses and methods of using natural products are generally excluded under 35 USC §101, as the USPTO has concluded, it is difficult to see how this is consistent with the obligations of the U.S. under Article 17.9(1) of the AUSFTA.

I find Mark’s comments in this last paragraph interesting because while some countries have excluded specific subject matter from patent eligibility on these grounds, the Supreme Court did not invoke principles of “public order” or “morality” to reach its decision in Myriad, and did not base its decision in Mayo on any general principle that diagnostic methods cannot be patented.

So, do the new USPTO 101 Guidelines violate international agreements?

Undermining International Harmonization

When Myriad was pending at the Supreme Court, I explained that a decision against patent-eligibility would set the U.S. apart from most other countries that do permit the patenting of “isolated” DNA. The new USPTO 101 Guidelines go far beyond Myriad, and set the U.S. apart from virtually every country with its new “structurally different test” for patent eligible compositions of matter. It is ironic that the USPTO is working with other national patent offices to promote “global patent harmonization” (as announced in this April 3 press release) while at the same time taking one giant step backwards from the rest of the world on the fundamental question of patent eligibility.

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1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.[1] Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of
this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

2. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.

3. Members may also exclude from patentability:
(a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals;
(b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof.

[1] For the purposes of this Article, the terms “inventive
step” and “capable of industrial application” may be deemed by a
Member to be synonymous with the terms “non-obvious” and
“useful” respectively.

That the guidelines are way over the top can be directly deducted from: ” provided that such exclusion is not made merely because the exploitation is prohibited by their law.”

So even if “Myriad” is read by the USPTO to be the law, it cannot be used to exclude anything but DNA from patentability.

I have always understood the phrase “merely because the exploitation is prohibited by their law” to refer to use of the invention, not to its patent-eligibility.

So, for example, it is illegal in the US to use or deal in the drug “ice” (at least, I presume this to be so:). However, the fact that the drug is illegal is not, in itself, a basis to exclude it from patentability under Art 27.2 of the TRIPS agreement, if the relevant molecule is new and nonobvious at the priority date, and otherwise patent-eligible.

I imagine that this provision may well have been included with pharmaceuticals in mind. There are numerous molecules that pass through periods of legal availability, total illegality, and/or legality under prescription only, well within the lifetime of a corresponding patent.

All of which makes the continuing existence of paragraph 50(1)(a) of the Australian Patents Act most odd! In fact, there has been a recent review and consultation process in which the repeal of this provision is proposed, and possible incompatibility with TRIPS is one of the reasons. New Zealand previously removed a similar provision in its own Patents Act for this reason.

I think the USPTO reply would be that the guidelines shed light on what is an “invention” and so don’t violate TRIPS because TRIPS only applies to inventions, and combining two or more natural products in not an invention, no matter how new, non-obvious and industrial applicable the combination may be!

The exclusions of patentability in TRIPS (see above 2 and 3) are quite small and again “provided that such exclusion is not made merely because the exploitation is prohibited by their law.”
But this is what the USPTO expressis verbis says. Natural products are excluded due to (wrongly understood by the USPTO) case law, even if the exploitation is not prohibited by the law.

And by the way, this exclusion is only valid for “protect ordre public or morality, including to protect human, animal or
plant life or health or to avoid serious prejudice to the environment”.

Further as far as I remember the courts never defined “invention”, but always said “invention is what the application says it is”. Please correct me, if I am wrong.

The USPTO excludes for example vaccines from patentability. As we are working in the field of vaccines, I wonder how any vaccine could be made of something that is not coming from nature and how they can exclude a pharmaceutical composition from patent eligibility.

I see no way, how a vaccine would fall under any exception of patentability under TRIPS.

And the USPTO even goes way beyond the alleged exclusion of Natural
Products by the courts in determining that combinations of natural
products are not patent eligable (the pomelo juice example or the
gunpowder example).

How can this be in line with TRIPS?

Last but not least how could the USPTO make the invention argument as 35 U.S. Code § 100 defines ” (a)
The term “invention” means invention or discovery.
” So if the USPTO reads TRIPS under an “understanding” out of the
US point of view in applying 35 U.S. Code § 100, it cannot read natural
products into “invention” as even discoveries are enclosed.

Article 70 of Trips further says:
8. Where a Member does not
make available as of the date of entry into force of the WTO Agreement patent
protection for pharmaceutical and agricultural chemical products commensurate
with its obligations under Article 27, that Member shall: […]

This article was written for countries that didn’t allow pharmaceuticals to be patented. It is easy to see that TRIPS requires pharmaceuticals to be patentable as long as they are in line with article 27.
The USA always was first in line to criticise countries who didn’t comply to Article 70. Every year a blacklist is published by the USTR (see Special 301 Report Watch List).
Each year the USTR must identify countries which do not provide
“adequate and effective” protection of intellectual property rights.
I guess this year they will have to put themselves on that list.

If I could just clarify the comments that you found interesting, I think that the reasons given by the Supreme Court are largely irrelevant at the level of International Agreements. Countries like Australia (and, I presume, the US), in which international treaties do not automatically become part of the law, generally sign up on the basis that they consider existing laws to be consistent with the treaty obligations, or they subsequently amend the relevant legislation.

The US clearly never had any intention to amend 35 USC 101. By and large, the US has more expansive IP protections than many other countries, and generally negotiations over IP provisions in treaties are directed to persuading the other party/parties to extend greater protections (witness, for example, the various controversies over the IP chapter of the Trans-Pacific Partnership Agreement). The ‘health and morality’ exceptions these days typically mirror the TRIPS agreement, and reflect a (perhaps grudging) recognition that these are actually pretty sound policy reasons for a sovereign state to limit the available scope of patent rights.

Since the US does not have any such express exclusions, it has no doubt always considered itself compliant with the agreements it has negotiated. If the Supreme Court rules that certain subject matter is excluded under 101, the US would maintain that there is no inconsistency so long as the excluded subject matter is limited to a subset of the kinds of things envisaged by the treaty provisions.

There is at least a strong argument to be made that the subject matter actually excluded by the Supreme Court in recent years (non-technical ‘abstract’ business methods in Bilski, certain diagnostic methods in Mayo, and ‘naturally-occurring’ genetic material in Myriad) is consistent with trade agreements to which the US is a party. But the USPTO guidance goes well beyond these specific cases, and that is where I see the problem.